Assessment is an integral part of the learning process. The traditional practice of assessment has changed to meet the need of the contemporary society. In this paper assessment strategies used in Open and Distance Education are discussed and constructive suggestions are given to meet the challenges of assessment. Recently we experience a paradigm shift in assessment both in face-to-face and ODL system. Content-based testing has shifted to performance-based assessment. Assessment is no longer used for grading and certification, rather it has linked with learning and skill development of the students. Instead of a single paper pencil test, a variety of techniques and methods are being increasingly conducted. In this context assessment in the ODL system has adopted a new shape to provide better assessment judgments to its students and at the same time helping teachers and administrators. Coping with the changing scenario in ODL we face challenges addressed extensively in this article.